A payday loan is a generic term for various forms of credit.
A payday loan is any loan that can be used for any private purpose. The origin of the term rests on the fact that banks grant loans to both companies and individuals. The term payday loan has become established in order to differentiate between these two.
A comparison of private loan
If you want to apply for a payday loan, you have the choice between numerous banks and various types of loan. The following table shows the most common forms of financing, the characteristics and differences. Compare the information presented and find a loan that fits your project.
Consumers use the installment loan most often because it can be used for any purpose. It is also offered by almost all banks and is available at very favorable conditions.
If you are looking for a payday loan for more financial scope, you usually use overdraft. With this, the current account can be overdrawn, whether by bank transfer or cash withdrawals. Since the overdraft facility quickly costs 10% and more interest, the cheapest alternative of the credit line is recommended.
The bank ultimately decides whether a loan application is approved, based on experience and internal guidelines. In general, the following requirements apply to apply for a payday loan:
- Age of majority: To apply for a payday loan, the applicant must be at least 18 years old.
- Residence: A permanent place of residence and permanent residence in the country.
- Job: A secure job, outside of the trial period, is one of the most important requirements for a loan approval. Officials often get a loan easily because of security.
- Income: In addition to a secure job, the amount of income plays a crucial role. The higher the loan amount you need, the higher your wages should be.
- Credit rating: The bank checks your credit file. Ideally, you have no or very few entries from late payments. Too many checking accounts, credit cards or existing loan can also have a negative impact on your personal credit rating.
- Security: A paid-for condominium, a car or a second borrower increases security for the bank and your chance of a payday loan.
- Credit: Make your request realistic, ie the loan amount should really be repayable within the agreed term.
payday loan with fixed interest or variable interest
If you take a look at the loan comparison, you will quickly notice: Some banks state an interest margin (eg 2.79% to 6.99%) in their terms. Others, however, only have a fixed interest rate (eg 4.44%). Now which is better?
At first glance, 2.79% look tempting with the floating rate loan, but 6.99% less. The interest rate that is allocated to you depends on your personal financial situation. Only those who have a very good starting position can get the best conditions. A fixed-rate loan is the cheapest solution relatively quickly. With these loan, the usual valuation process is also carried out, but you already know what interest you will receive when you apply.